Globalisation and real estate

markets - Scope for pro-poor

development
Ramin Keivani
UK-Brazil Urban Network
Sao Paulo workshop
22-25 November 2010

Globalisation: What does it entail?

Implies that a world composed of separate national
economies is being superseded by a single global
economy, States by global markets - countries/cities
become junctions in flows that governments have less
control
Uneven development
- Path dependent

Macro economic effects

- Deregulation, liberalisation, sectoral shifts

New city economy as junctions of flow

Pervasive effects in the North and South

Impact on urban form and property1

Shift from a Christaller based hierarchical system to
functional synergy and networked city system,
- E.g. Ranstad, London-Cambridge, London-Oxford, Stockholm-Uppsala
- Cross border corridors, e.g., HK-Guangzhou
- In Brazil hw can we define the relationship between SP, Rio and BH?

City development reoriented in line with spatial

requirements of international capital
- Occupier demand
Intensified redevelopment of Central Business Districts, creation of
new CBDs
- State of art office space with global connection

Globally connected industrial estates

Retail, leisure and hospitality facilities
Housing

Canary Wharf - London Docklands

Puxi, Shanghais old-town CBD

Pudong, Shanghais new-town CBD

Impact on urban form and property2

- Investment demand
Core and opportunistic investment depending on:
- Institutional risks
Property laws and regulations, professional services,
contract enforcement, etc
- Market risk
Interest rates, recession, wars, political stability, economic
growth, etc

The more globally integrated the higher the

risks from external market risks

Total real estate market return by

region
(RREEF, 2010a)

Total investible and invested real

estate by region in 2009
(RREEF, 2010a)

Global real estate cross border

investment
(DTZ, 2010)

Non-UK ownership of City offices in

London
(Lizieri and Kutsch, 2006)

Ownership of London prime homes

(DTZ, 2009)

Impact on urban form and property3

Encroachment on cheaper peripheral land
- Particularly for industrial development and upper middle class housing, e.g.,
Bangalore

Formation of extended metropolitan regions and even larger

mega urban regions
- E.g., Desakota regions in SE Asia, or macro greater Sao Paulo
- Blurring of rural and urban dichotomy, shifting industrial activities to peri-urban and
rural areas, agglomeration economies, etc.

Redistribution of industries in cities and resultant spatial

reconfiguration and redevelopment
Opportunity for rapid growth of strategic nodes
- E.g. Dubai

Bangalore: expansion in to peripheral areas

2007)

(Sudhira et al,

Higher middle income apartments on peripheral

land in Bangalore

 All of this means major investment in real

estate both as a direct result of global
investment diversification strategies and
indirect result of (globally induced)
development activities
- Dubai with about 24% of GDP in 2008 (real estate
and construction) as prime example

But what about Latin America and Brazil?

Global Network Connectivity

175 firms - 526 cities
(Pain, 2009)

Rank

GNC

2008

London

100

Shanghai

69.74

12

Seoul

63.5

16

Buenos Aires

61.19

17

Mumbai

60.86

18

Kuala Lumpur

59.72

19

Warsaw

56.4

20

Sao Paulo

56.19
2000

16

Sao Paulo

54.74

23

Buenos Aires

44.56

Global real estate market value in 2009

(RREEF, 2010a)

Latin America 2009 commercial

property investment activity

(RREEF, 2010b)

Latin America Class A Office Market

(RREEF, 2010b)

Quality of Office types in Brazil

(RREEF, 2010b)

Globalisation and its urban discontents

These impact on all sustainability spheres but we
focus on urban equity:
- How can urban lower income groups engage more effectively with
economic globalisation to maximise their own benefits?

School of the Built Environment

Looking at the problem from another perspective:

26% in Sao Paulo live in Favelas and illegal settlements

School of the Built Environment

Demographic shifts in Sao Paulo

(Torres et al, 2007)

Distribution of real estate projects

(Torres et al, 2007)

Rapid urban sprawl in Sao Paulo

(Torres et al, 2007)

Opportunities for the low income

population
Economic readjustments in peripheral/periurban areas
The role of land and property as assets for
income generation
Examples of peri-urban villages in
Quanzhou and Hanoi
Institutional constraints
- Property rights: tenure, development, use and
exchangeof the Built Environment

The role of urban governance1

A definition:
- Broader than government entailing the process of interaction between
the public sector and various actors and groups of actors in civil
society

Crucial to this are power relations and interactions

between agents that determine management and
allocation of resources

School of the Built Environment

The role of urban governance2

Devas (2001) identifies the necessity for congruence
of three critical factors:
- inclusive political process
- sufficient competence and capacity of city governance institutions
- pressure from civil society

Globalisation creates particular conditions that have

direct and specific consequences on all of the above,

School of the Built Environment

What about the Brazilian context?

Target of major direct and indirect globally induced
property investment as a result of rapid economic
growth, rising global significance and integration in
to the global property market.
The statute of the City has provided the scope for
greater socialisation of development benefits:
- But what has been the effect on the ground?
- How have the institutional and governance arrangements
impacted the implementation?
- What type of institutional arrangements on property rights
are best suited for enhancing low income capacity to
benefit from land development?

Related questions
Market:
- How has economic globalisation impacted/impacting the development
of cities and real estate markets in Brazilian cities?
Economic restructuring, shift to higher value added functions, rising land
and property prices as result of globally induced developments, higher end
commercial housing developments, rising land prices in the centre and
demographic shifts, urban sprawl to periphery, etc

- What are the main institutional and functional characteristics of the

property market in Brazilian cities?

Comparing with UK:

- How does the Brazilian context compare with section 106 agreements
(planning gain) in the context of UK?
- What lessons can be learnt for balancing market and social demands
and attain more equitable urban development?

Thank you

References
Devas, N. (2001) Does city governance matter for the urban poor,
International Planning Studies, 6(4), 393-408.
DTZ (2010) Money into property 2010, DTZ London.
DTZ (2009) Prime, a global neighbourhood, DTZ London.
Lizieri, C and Kutsch, N (2006) Who owns the city 2006, Working Paper,
University of Reading Business School, UK.
Paine, K (2009) Londres - The place to be, Sciences Humaines, Les Grands
Dossiers, 17.
RREEF (2010a) Global real estate insights 2010, RREEF London,
www.rreef.com
RREEF (2010b) Latin American real estate markets in perspective, RREEF
San Francisco, www.rreef.com
Torres, H, Homberto, A and De Oliveira, M.A (2007) Sao APulo peri-urban
dynamics, Environment and Urbanization, 19, 207-223.